ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Predatory Tactics by Credit Cards Stopped by New Rules

Predatory Tactics by Credit Cards Stopped by New Rules

September 18, 2010 | Updated on September 18, 2010
Add to Favorites:
The content is accurate at the time of publication and is subject to change.

The US government has capped the penalties for the late payment of bills by credit card customers, as part of the Credit Card Reform Act. The late fee has been capped to 25 dollars or the minimum payment that is due from the customer, whichever is the lower amount. This has finally ended the practice of charging hefty fines on credit card customers. According to the new regulations and rules, the issuers of credit cards are required to give 45 days` notice before any increase in the interest rate on the credit card balances. Apart from this, the credit card issuer has to provide a reason for the increase in the interest rate. Also the interest rate cannot be changed in the first one year after the account has been opened. Most importantly, the credit card customers can cancel their card during this notice period.

For the US credit card customers, this crackdown is one of the most beneficial results out of the efforts out of White House to bring wide swept reforms in the financial services industry. This has also led a battle with Wall Street in a long wrangle with Congress. Interestingly these reforms are also backed by the American Bankers` Association. However, experts are fearing that these wide spread regulations which will affect the profitability of the credit card issuers might result in the increase in interest rates on the cards. This would be a strategy that credit card issuers might use to make up for some of the losses in revenue.

According to a banking analyst at Credit Suisse, earlier most of the credit card issuers used to charge a small number of irregular card holders but now the cost would be spread out over a more uniform base. The new regulations have also been praised a lot by consumer advocates who think that the measures would enhance the visibility for the customers. The regulations will help customers to be aware of what they are actually paying for in the opinion of Susan Weinstock, who directs financial reform at the Consumer Federation of America.

The interest rates at the height of the credit crunch had increased massively to about 29.9%. Credit card issuers have been criticized for their actions such as quietly raising the interest rates without letting the customers know, especially for those customers who have a bad credit record and are vulnerable to those changes.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!